We’ve compiled all the information you need to know about workers’ compensation insurance.
What does Workers’ Compensation Insurance Cover?
Workers’ comp insurance kicks in after an employee is hurt on the job. It typically covers costs related to:
- Medical benefits covering treatment
- Ongoing medical costs (for example, hospital stays, X-rays, and surgeries)
- Physical therapy
- Disability benefits
- Compensation for lost wages
- Temporary total disability benefits
- Permanent partial or total disability benefits
- Death benefits, such as funeral costs, if an employee dies in a work injury
If you don’t have workers’ comp, you can expect to pay this all out of pocket.
Every State Is Different, JGS Can Make It Easier For You
Every State is Different
State laws regulate workers’ comp. That means every state is different. Always remember to check in with your state’s laws. For example:
- Some states have a minimum number of employees you need before getting workers’ comp.
- Some states don’t require certain industries to have workers’ comp insurance.
- States will differ in how much insurance is required and how claims are handled.
- Some States require you to purchase workers’ compensation insurance from a state fund (these include North Dakota, Ohio, Washington, and Wyoming).
Here’s a consistent truth: Almost every state requires employers to have workers’ comp insurance.
To find out more: You can either research your state’s laws extensively, or consult an insurance agent.
What if it’s not Legally Required?
If you found out that workers’ compensation insurance isn’t required in your state, should you still consider purchasing it? We believe investing in workers’ compensation insurance is in your best interest.
Workers’ comp insurance can protect you financially down the line. If you don’t invest in it, you’ll be responsible for all the costs if an employee gets injured or exposed to an occupational disease. That can be up to $42,008 per incident.
You should especially consider investing in workers’ comp if: You own a business in a high risk industry, including:
- Health services
- Refuse collecting
In these industries, the possibility of an employee accident or injury is high. Workers’ comp insurance helps you pay for those fees.
How much does Workers’ Compensation Insurance Usually Cost?
We mentioned earlier that without workers’ comp, each work-related injury costs employers an average of $42,008 per incident. Workers’ comp costs are minor in comparison, considering workplace industries in the U.S. kill and disable more than 100,000 workers each year.
Unfortunately, working injuries are a reality. Investing in workers’ comp insurance is key to protect you financially down the road—and help your employees.
So how much can you expect to spend on worker’s comp? Your premium depends on:
- Your state’s laws.
- What industry you’re in. Riskier industries have higher premiums.
- Your company’s annual payroll is used to calculate your cost.
- Claims history. If you’ve had a lot of workers’ comp insurance claims in the past, your premium will be higher.
- The workers’ classifications. For example, in California, you can expect to pay 40 cents for every $100 in payroll for low-risk workers. This includes administrative workers. For high risk workers, you’ll pay $33.57 per every $100 in payroll.
There are a lot of variations in premiums. Nationwide, the average cost of workers’ comp premiums is $936 per year, per employee. That’s an average of $78 per month for each employee.
But again, you’ll want to connect with an agent to find out more about what costs you can expect to pay.
Legal consequences for Noncompliance
If you don’t get workers’ comp when you’re legally required to, you face serious consequences. You might experience hefty fines, criminal charges, and even jail time. Some states have more serious consequences than others, including:
- California: You can spend 1 year in jail or be fined for a minimum of $10,000. The penalty can be up to $100,000.
- Illinois: You’ll face a minimum fine of $10,000. Plus, $500 for each day of noncompliance.
- New York: Fines for uninsured employers can result in fines ranging from $1,000 to $50,000. Every 10 days without coverage, you can face an additional fine of $2,000.
- Pennsylvania: Intentional noncompliance is a third-degree felony. You can be fined for $15,000 or spend 7 years in jail.
Even if you don’t live in one of the strictest states, you’ll want to be sure your employees are covered.
Minimize Your Total Cost Of Risk
You aren’t powerless when it comes to workers’ comp premiums. Here’s how you can keep your workers’ comp insurance premiums down:
This is required by law. Train employees on safety protocols, hazardous machinery, workplace for hazards, hazardous chemicals, and how to inspect and use dangerous equipment. Training should be ongoing—not just one time. Plus, you need to keep detailed records of your training.
Hire an OSHA Lead whose job is to train employees, maintain safety in the workplace, and ensure your records are up-to-date and accurate. Alternatively, you could hire an independent safety consultant.
Provide the proper personal protective equipment (PPE). Again, this is required by law if a Job Hazard Analysis (JHA) determines your employees need it.
This includes annual JHAs for each job, creating OSHA Written Safety Plans, maintaining safety records, more.
Make sure your chemicals are properly labeled and stored.
Make sure all your spaces are optimized ergonomically, and teach employees how to ensure they’re mindful of ergonomics.
Build a culture that values workplace safety.
Tips To Keep Your Premiums Down
Are your employees classified correctly? A misclassified employee can hike your premiums up for no good reason.
Document your findings, be as thorough as possible, and take precautions to make sure it doesn’t happen again.
And make sure your employees know to inform you ASAP if anything happens.
This helps employees get treatment quicker, which helps them recover faster.
This helps employees return to work sooner when they’re injured. The longer they’re out of work, the more it costs you.
Avoid fraudulent claims and resolve claims more quickly by properly managing workers’ comp claims.
This is a history of your workplace comp claims, including a description, how much you paid, and if the claim is closed. If you don’t have many claims, you can use this information to lower your insurance premiums.
Connecting with an agent is typically one of the most effective ways to save money on workers’ comp insurance premiums.
However, remember: Cheaper isn’t necessarily better. Make sure you review all the details of your coverage with an insurance agent before signing on the dotted line.
In the end, it would be smarter to invest more into a plan that has more coverage (rather than a low-cost plan with less coverage). This is especially true in high-risk industries.
Our Goal is to make the Process Simpler
We get it—workers’ compensation insurance is confusing. From figuring out if you need it to finding a policy that works for you, it’s all time-consuming.
At JGS Insurance, our main goal is to help you through the process. We’re here for you. Talk with us today about workers’ comp insurance.